Gold Gains on Demand for Protection as

Gold climbed, snapping two days of losses, after data showed China’s manufacturing contracted in May for the first time in seven months, boosting demand for the metal as a protection of wealth as equities fell.

The preliminary reading for a Chinese purchasing managers’ index missed analysts’ estimates and came in below the level of 50, indicating a contraction. Commodities and stocks tumbled, with Japanese equities falling the most since the aftermath of the Fukushima disaster two years ago. Bullion also gained as the U.S. dollar declined.

Sponsored Links
	Growth Stock Pick (CTLE) The Nano-tech Juggernaut; An Awakening $2.6 Trillion ...
	Penny Stock of the Day Don't miss the next stock to take off! Insane gains f...
	Growth Stock Pick (CTLE) The Nano-tech Juggernaut; An Awakening $2.6 Trillion ...
Buy a link

“Gold is up today, so far, while everything else is down,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “It is possible that the stocks fall has led to nervous investors buying gold again.”

Bullion for June delivery climbed 1.6 percent to $1,389 an ounce by 6:59 a.m. on the Comex in New York. Gold for immediate delivery gained 1.5 percent to $1,390.31 an ounce.

Gold for immediate delivery jumped as much as 2.8 percent and fell as much as 1.6 percent yesterday after the Federal Reserve Chairman Ben S. Bernanke told lawmakers a premature withdrawal of stimulus could endanger economic recovery, while noting the pace of bond purchasing will be reduced if labor market improvement is sustainable.

Market Moves

“The bullion market has no real direction whatsoever at the moment,” David Govett, head of precious metals at Marex Spectron Group in London, wrote in a report today. “Moves are massively over-exaggerated due to the type of trading involved and once these moves are done, the market generally comes back to where it started.”

Gold at the morning “fixing,” used by some mining companies to sell output, slid to $1,386 an ounce in London from $1,408.50 yesterday afternoon. Assets in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, dropped to 1,020.07 metric tons yesterday, the lowest level since February 2009, according to data on the company’s website.

Some investors have been short-covering, or buying gold to close out bets on falling prices, O’Byrne said. Hedge funds and other large speculators held 74,432 so-called short gold contracts on May 14, U.S. Commodity Futures Trading Commission data show. That’s the highest since the data began in June 2006 and compares with 67,374 a week earlier.

Gold-futures volumes were 83 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.

Silver for July delivery lost 0.3 percent to $22.40 an ounce, platinum for July delivery lost 0.6 percent to $1,459.70 an ounce, and palladium for June delivery fell 1.9 percent to $737.65 an ounce.